Pay-per-action system for selling advertisements

ABSTRACT

A system is disclosed for a pay-per-action (PPA) advertising model. An advertiser reports actions and pays an advertising provider for each action that is reported. The payment may be based on the rate at which the actions are reported. The action rate may be updated based on each reported action, which may modify the payment for that action and may modify the payment for previous actions. A one-time premium may be charged to advertisers and a minimum action rate may be established to encourage advertisers to accurately report actions.

BACKGROUND

Online advertising may be an important source of revenue for enterprisesengaged in electronic commerce. A number of different types of web pagebased online advertisements are currently in use, along with variousassociated distribution requirements, advertising metrics, and pricingmechanisms. Processes associated with technologies such as HypertextMarkup Language (HTML) and Hypertext Transfer Protocol (HTTP) enable aweb page to be configured to contain a location for inclusion of anadvertisement. A page may not only be a web page, but any otherelectronically created page or document.

The online advertising industry utilizes a pay-per-impression model anda pay-per-click model. An impression is a display of an advertisement toa user. In general, an advertiser is willing to pay for impressions ifthe aim of the advertising campaign is to increase brand awareness.However, with the growth of sponsored searching, it has been more commonto utilize the pay-per-click model as it decreases the risk to smalladvertisers. An advertiser is more inclined to pay for click-throughs ifthe goal is to generate traffic which in turn increases the probabilityof a sale. An advertiser is not assured that each recorded impressionresults in a user actually viewing the advertisement on the page;however, a click on that advertisement confirms that the advertisementwas acknowledged. In the former case, advertisers pay per impression(PPM) while in the latter case they pay per click (PPC). The PPC modelalso may include a rank-by-revenue mechanism in which ads are sorted bytheir pay per click multiplied by the measured or estimatedclick-through-rate (CTR).

However, the PPC model may be subject to a click fraud problem. Clickfraud can take place, for example, if an advertiser's employeesrepeatedly click on a competitor's advertisement link in an attempt todrain the competitor's marketing budget. Also, rogue web site owners whoadvertise with an advertising provider (such as Yahoo! ® or Google®) maymaliciously click on their own advertisement links to generate morecommissions from that advertisement.

An alternative model is pay-per-conversion or pay-per-action (PPA). ThePPA model links payments to actions (such as sales/phone calls/onlineorders/etc.). An advertiser states his/her willingness to pay for an“action,” which may be any action beyond a click-through. Thepay-per-impression and pay-per-click models allow the advertiserprovider to record impressions or clicks and request payment based onthat measurement. However, a conversion or action in the pay-per-actionmodel is recorded by the advertiser and reported to the advertisingprovider. Accordingly, the advertising provider must rely on accuratereporting by the advertiser of conversions or actions to charge theadvertiser. Therefore, there is a need for an accurate and fair PPAmodel for reporting actions that result from online advertising.

BRIEF DESCRIPTION OF THE DRAWINGS

The system and method may be better understood with reference to thefollowing drawings and description. Non-limiting and non-exhaustiveembodiments are described with reference to the following drawings. Thecomponents in the drawings are not necessarily to scale, emphasisinstead being placed upon illustrating the principles of the invention.In the drawings, like referenced numerals designate corresponding partsthroughout the different views.

FIG. 1 illustrates an embodiment of an advertising system;

FIG. 2 is a diagram of an exemplary advertising payment system;

FIG. 3 is a flowchart depicting an embodiment of a payment process; and

FIG. 4 is an illustration of a general computer system for use with thedisclosed embodiments.

DETAILED DESCRIPTION

By way of introduction, the embodiments described below include a systemand method for advertising. The embodiments relate to a pay-per-action(PPA) advertising model. An action is anything beyond a click of anadvertisement (such as a purchase or filling out a form) that resultsfrom an impression of that advertisement. An impression may be anyviewing of an advertisement by a user or consumer. An advertiser reportsthe actions and pays the advertising provider for each action. Thepayment is based at least in part on the rate at which the actions arereported. The action rate may be the number of actions reported perimpression. The action rate may be updated based on each reportedaction, which may modify the payment for that action and may modify thepayment for previous actions. A one-time premium may be charged toadvertisers and a minimum action rate may be established to encourageadvertisers to accurately report the actions.

Other systems, methods, features and advantages will be, or will become,apparent to one with skill in the art upon examination of the followingfigures and detailed description. It is intended that all suchadditional systems, methods, features and advantages be included withinthis description, be within the scope of the invention, and be protectedby the following claims. Nothing in this section should be taken as alimitation on those claims. Further aspects and advantages are discussedbelow in conjunction with the embodiments.

FIG. 1 depicts a block diagram illustrating one embodiment of anexemplary advertising system 100. The advertising system 100 may providea platform for the bidding, selection and payment of advertisementsincluded in pages, such as web pages. In the advertising system 100, auser device 102 is coupled with a web server 106 through a network 104.A web server operator 110 may be coupled with the web server 106. Theweb server 106 is coupled with a web log database 108, and both arecoupled with an ad publisher server 112. An advertiser 120 coupled withan advertiser server 118 may be coupled with the ad publisher server 112and/or the web server 106. An ad publisher 116 and ad publisher database114 may be coupled with the ad publisher server 112. Herein, the phrase“coupled with” is defined to mean directly connected to or indirectlyconnected through one or more intermediate components. Such intermediatecomponents may include both hardware and software based components.Variations in the arrangement and type of the components may be madewithout departing from the spirit or scope of the claims as set forthherein. Additional, different or fewer components may be provided.

The user device 102 may be a computing device which allows a user toconnect to a network 104, such as the Internet. Examples of a userdevice include, but are not limited to, a personal computer, personaldigital assistant (“PDA”), cellular phone, or other electronic device.The user device 102 may be configured to allow a user to interact withthe web server 106 or other components of the advertising system 100.The user device 102 may include a keyboard, keypad or a cursor controldevice, such as a mouse, or a joystick, touch screen display, remotecontrol or any other device operative to allow a user to interact withthe web server 106 via the user device 102. In one embodiment, the userdevice 102 is configured to request and receive information from the webserver 106, such as a web page.

The user device 102 may be configured to access other data/informationin addition to web pages over the network 104 using a web browser, suchas INTERNET EXPLORER® (sold by Microsoft Corp., Redmond, Wash.). Thedata displayed by the browser may include advertisements. In analternative embodiment, software programs other than web browsers mayalso display advertisements received over the network 104 or from adifferent source. The user device 102 may be implemented as in thecomputer system described below with respect to FIG. 4.

In one embodiment, the web server 106 provides an interface to a network104 and/or provides a web page to the user device 102. The web server106 may provide the user device 102 with pages (includingadvertisements) that are requested by a user of the user device 102. Inparticular, the web server 106 may act as an interface to a largernetwork, such as the Internet and/or the network 104, by providing aportal for a user of the user device 102. The web server 106 may be acontent provider for the user device 102 that provides content fromanother source, such as other web servers in a network. The web server106 may be operated by a web server operator 110 that maintains andoversees the operation of the web server 106.

In one embodiment, the web server 106 may be a search engine forsearching for pages, such as the web page which may be accessed on theWorld Wide Web at yahoo.com (operated by Yahoo! Inc., in Sunnyvale,Calif.), which is used to search for pages in a network. The user mayenter a search term (also referred to as a query or a keyword) into theuser device 102 that is transmitted to the web server 106. The webserver 106 performs a search on the search query and provides theresults of the search for display on the user device 102. The web server106 may also display advertisements that are related to the search termand/or the search results and that are provided by the ad publisherserver 112 as discussed below.

The web server 106 may include or be coupled with a web log database108. The web log database 108 may include records or logs of at least asubset of the queries or requests for data submitted to the web server106 over a period of time. In one example, the web log database 108 mayinclude a history of search terms or Internet browsing data. The datastored in the web log database 108 may relate to or include various userinformation, such as preferences, interests, profile information orbrowsing tendencies, and may include the number of impressions and/ornumber of clicks on particular advertisements.

The ad publisher server 112 may be coupled with the web server 106 andis configured to provide advertisements to be displayed on the userdevice 102 with the content provided by the web server 106. In oneembodiment, the ad publisher server 112 may be a web server, such as theweb server 106. In other words, the user device 102 may receive contentdirectly from the ad publisher server 112 over the network 104.

The ad publisher 116 may be coupled with the ad publisher server 112and/or coupled with the web server 106 for providing the ad publisher'sadvertisements for display. The ad publisher 116 may operate or overseethe ad publisher server 112 by receiving advertisements from theadvertiser server 118 and selecting advertisements for display on pages.In addition, the ad publisher may record the impressions and clicksrelated to a displayed advertisement. The ad publisher 116 may be anyoperator of a page displaying advertisements that receives a paymentfrom the advertisers of those advertisements. For example, Yahoo! ® maybe an ad publisher 116 because its search engine (www.yahoo.com) andrelated Yahoo! ® web pages display advertisements for advertisers, suchas the advertiser 120. The ad publisher 116 may be an advertisementprovider who provides advertisements for other pages. For example,Yahoo! Content Match ® provides advertisements (from third-partyadvertisers) to any other site for display on that site. The advertisermay pay Yahoo! Content Match ® and/or the site for the display of theadvertiser's advertisements.

The ad publisher database 114 may be coupled with the ad publisherserver 112 and may store advertisements from a number of advertisers,such as the advertiser 120. In addition, the ad publisher database 114may store records on the advertisements that are shown and the resultingimpressions and/or clicks for those advertisements. The data related toadvertisement impressions, clicks and resulting actions may be stored ineither the web log database 108 and/or the ad publisher database 114 andused in the bidding and payment process for selecting and receivingpayments for advertisements, as discussed below. The data may becontinuously updated to reflect current viewing, clicking andinteraction with the advertisements provided by the ad publisher 116.

The ad publisher server 112 may receive advertisements from a number ofadvertisers, such as the advertiser 120. In particular, the ad publisherserver 112 may be coupled with the advertiser server 118. The advertiserserver 118 may be an interface for the advertiser 120 to provideadvertisements to the ad publisher server 112. The advertiser 120 andthe ad publisher 116 may utilize the payment process discussed below, inwhich the advertiser 120 pays the ad publisher 116 a price for actionsperformed based on the advertisements of advertiser 120 being displayedby the ad publisher 116.

The advertiser 120 may pay the ad publisher 116 for each impressionand/or each click of the advertiser's displayed advertisement.Additionally, the advertiser 120 may pay the ad publisher 116 each timeits displayed advertisement results in an action. The ad publisher 116may select which advertisement is displayed in each advertisement slotbased on a bidding process. For example, the ad publisher 116 may selectthe advertisement with the highest or most relevant bid. A relevant bidmay be established by matching the content of a page with content of theadvertisement, such as with Yahoo! Content Match®. Depending on thepayment scheme, the advertiser 120 may pay the ad publisher 116 eachtime the advertisement is viewed (PPM), clicked (PPC), and/or results inan action (PPA).

In one exemplary embodiment, when a user requests content through theuser device 102, the request is submitted to the web server 106 over thenetwork 104. The web server 106 retrieves the requested content andcontacts the ad publisher server 112 to receive at least oneadvertisement to be displayed with the content. The ad publisher 116 mayreview the advertisements that are available in the ad publisherdatabase 114. The advertisement that is shown with the content mayadvertise a product from the advertiser 120. The content with theadvertisement may then be transmitted to the user device 102, and theuser views the content along with the advertisement.

Any of the components in the advertising system 100 may be coupled withone another through a network, including but not limited to the network104. For example, the ad publisher server 112 may be coupled with theweb server 106 or the web log database 108 over a network. Likewise, theadvertiser server 118 may be coupled with the web server 106 and/or thead publisher server 112 over a network. Accordingly, any of thecomponents in the advertising system 100 may include communication portsconfigured to connect with a network.

The network or networks that may connect any of the components in theadvertising system 100 to enable communication of data between thedevices may include wired networks, wireless networks, or combinationsthereof. The wireless network may be a cellular telephone network, anetwork operating according to a standardized protocol such as IEEE802.11, 802.16, 802.20, published by the Institute of Electrical andElectronics Engineers, Inc., or WiMax network. Further, the network(s)may be a public network, such as the Internet, a private network, suchas an intranet, or combinations thereof, and may utilize a variety ofnetworking protocols now available or later developed including, but notlimited to TCP/IP based networking protocols. The network(s) may includeone or more of a local area network (LAN), a wide area network (WAN), adirect connection such as through a Universal Serial Bus (USB) port, andthe like, and may include the set of interconnected networks that makeup the Internet. The network(s) may include any communication method oremploy any form of machine-readable media for communicating informationfrom one device to another. For example, the ad publisher server 112 orthe web server 106 may provide advertisements and/or content to the userdevice 102 over a network, such as the network 104. The network ornetworks described above, including the network 104 may be implementedwith computer systems, such as the computer system discussed below withrespect to FIG. 4.

The web server 106, the web log database 108, the ad publisher server112, the advertiser server 118, the ad publisher database 114, the userdevice 102, the web server operator 110, the ad publisher 116, and/orthe advertiser 120 may represent computing devices of various kinds,such as the computer system or its components described below withrespect to FIG. 4. Such computing devices may generally include anydevice that is configured to perform computation and that is capable ofsending and receiving data communications by way of one or more wiredand/or wireless communication interfaces. Such devices may be configuredto communicate in accordance with any of a variety of network protocols,including but not limited to protocols within the Transmission ControlProtocol/Internet Protocol (TCP/IP) protocol suite. For example, theuser device 102 may be configured to execute a browser application thatemploys HTTP to request information, such as a web page, from the webserver 106. The present disclosure contemplates the use of acomputer-readable medium that includes instructions or receives andexecutes instructions responsive to a propagated signal, so that anydevice connected to a network can communicate voice, video, audio,images or any other data over a network.

FIG. 2 illustrates a timing diagram of an exemplary pay-per-action (PPA)model. The pay-per-action model discussed in FIG. 2 includes a processby which an advertiser may bid for an advertisement slot and pay for animpression, click, and/or action that results from that advertisement.In one embodiment, the model illustrated in FIG. 2 may be performed byor within the advertising system 100. The advertiser 120 may place a bidfor a particular advertisement slot in a page provided by the adpublisher server 112. The ad publisher 116 may select the advertisementfrom the advertiser 120 who places the highest or relevant bid.

The PPA model may include bidding and payment based on impressions,clicks and/or actions. For example, the advertiser 120 may place a bidthat is based on an amount that the advertiser will pay for eachimpression. The advertiser 120 may pay $0.01 for every impression of theadvertisement. If the advertisement is viewed 10,000 times, then under apay-per-impression (PPM) model, the advertiser 120 pays the ad publisher$100. The PPM model may be used for advertisers, such as brandadvertisers, who seek attention from consumers. Likewise, in thepay-per-click (PPC) model an advertiser 120 places a bid whichrepresents a price that the advertiser 120 will pay for each click orinteraction with the advertisement. For example, the advertiser 120 maypay $1.00 for each click of an advertisement.

The pay-per-action (PPA) model may be utilized such that the advertiser120 bids for and pays for a conversion or action after a click-throughresulting from the display of the advertiser's 120 advertisement. Aconversion or action may be any act that directly results in revenue.For example, one type of action may be buying a product from theadvertiser's 120 web site. If a consumer clicks on an advertisement andsubsequently purchases a product from that site, the advertiser 120 paysthe ad publisher 116 for the action. There may be other types ofactions, depending on the type of the advertiser. For example, for an adportal, a click on one of the ads listed on the page may be consideredan action as it brings immediate revenue. Alternatively, the action maynot bring in revenue, but may result in additional customers. Forexample, an action may include filling out an application (e.g., creditcard, or other account application), calling a phone number, or signingup for a service, such as a social networking or media download site.Certain advertisers may advertise to seek attention, such as big brands(e.g., auto manufacturers) and consequently may prefer PPM. Conversely,other advertisers may seek actions from its advertisements (e.g., smallonline shops).

In the PPA model of advertising, the advertiser 120 can make paymentscontingent on impressions and click-throughs as well as actions. Forexample, the advertiser can offer to pay 0.1 cents for every impressionof its advertisement, 10 cents every time its ad is clicked on, plus $40every time an action is taken, such as the user filling out a creditcard application on the web site. The auction mechanism by the adpublisher 116 extracts all such bids from the advertisers and decideswhich advertisements to deliver based on the bids. The ad publisher 116also determines how much each advertiser should be charged, depending onwhether the ad is displayed, clicked on, and/or whether the advertiser120 reports that the advertisement has resulted in an action. In oneembodiment, the bids from the advertisers 120 are ranked based on theirbid per impression, plus their bid per click times their click-throughrate (CTR), plus their bid per action times their action rate (AR). Thecalculation and modification/adjustment to the action rate is discussedbelow.

Referring to FIG. 2, in step 202 the advertiser may pay a premium feebefore bidding for advertisement slots available on a page from the adpublisher 116. The advertiser may be charged an initial fixed premiumfor entering the system (submitting its first advertisement to the adpublisher 116) and providing advertisements for display. In oneembodiment, the PPA model may be structured to avoid prevent advertisersfrom not reporting actions to avoid paying the fee for the action to thead publisher 116. The premium fee may be one way to prevent advertisersfrom submitting advertisements and then removing them without reportingor paying for any actions. A second protection may be a minimum actionrate (AR) requirement for advertisers to further ensure that advertisersare reporting any actions they receive. As discussed below, the actionrate is the number of actions per impression for a particularadvertisement. If an advertiser does not report actions at a rate abovethe minimum action rate, then that advertiser's advertisements may beremoved. In addition, the payment for each action may be at leastpartially based on the action rate, so that advertisers that potentiallyunder-report actions may have to pay a larger amount for each action.Further, an advertiser's subsequent bids may be at least partially basedon that advertiser's action rate, so under-reporting actions may resultin fewer available advertisements for that advertiser.

The advertiser 120 reports when an action occurs. Since the advertiser120 pays the ad publisher 116 for each reported action, the advertiser120 may avoid payment by not reporting all actions. The premium andminimum action rate may be established to discourage non-reporting ofactions by the advertisers. The premium may be a small, one-time fee, soit does not affect honest advertisers who do not attempt to takeadvantage of the system. In one embodiment, all or part of the premiummay be refunded to the advertiser upon deciding to no longer advertisewith the ad publisher 116, depending on the advertiser's action rateupon leaving. For example, an advertiser may pay a $100 premium and uponno longer advertising with the advertiser publisher 116 is awarded backa percentage of the $100. If the action rate is below the minimum actionrate, then none of the premium is refunded. The refund amount may dependon the learning algorithm used, and/or the action rate of the advertiserupon leaving. For example, if the action rate of the advertiser at thetime of leaving is larger than the action rate initially assigned to theadvertiser (upon submitting the first advertisement), then the premiummay be refunded. In one embodiment, the premium can be thought of as thefee for buying an initial high action rate. A first time advertiser maystart with a standard action rate (above the minimum rate) thatestablishes the bid amount and payment amount for an action. The actionrate will be modified as impressions are recorded and actions arereported.

The value of the premium fee may depend on the threshold for the minimumaction rate, an action-rate learning algorithm (which determines theaction rate and refines it based on new data), and/or the initializationof the action rate when an advertising campaign starts. The paper “ClickFraud Resistant Methods for Learning Click-Through Rates” by NicoleImmorlica et al., published by Microsoft Research, which is herebyincorporated by reference, illustrates examples of action based learningalgorithms, which may correspond with click-based learning algorithms.

Action based learning algorithms may be used to calculate the “expected”revenue from an auction. Since an action is a future event with aprobability of occurrence, the auction mechanism may estimate the futureactions based on past action behavior. In one embodiment, when theaction-rate learning algorithm estimates the action rate by the averageover the last k actions (i.e., AR is equal to k divided by the number ofimpressions it took to get the last k actions), the amount of premiummay be calculated to be kp(1/δ−1), where p is the reserve price for abid or the next highest bid (discussed below), and δ is the thresholdfor minimum allowable action rate. The minimum allowable action rate maybe established by the ad publisher 116 to discourage under-reporting ofaction from the advertiser 120. Accordingly, the amount of the premiumincreases if the threshold is decreased, or if the value of k increases,which may correspond to increasing the accuracy of the learningalgorithm. In addition, the lower the minimum action rate δ is, thehigher the premium may be. If the minimum action rate δ is high, thenthe premium may be relatively low.

In step 204, the advertiser 120 may provide a request to the adpublisher 116 for an advertisement. The request may include theadvertiser's 120 bid for a particular advertisement slot. As discussedabove, the bid may include a price for each impression, click and/oraction. In one embodiment, the bid per action is b_(a), AR is theestimated action rate for this advertiser 120, and p is the price-perimpression of the ad slot. The value p is the amount that must be bid toget a particular slot, such as a reserve price, or the bid of the nextadvertiser. When only bidding for an action, the advertisement may bedisplayed when b_(a)×AR≧p. The advertiser may be charged an amount equalto p/AR per action. However, the advertiser 120 may specify a bid perimpression b_(m), a bid per click b_(c), and/or a bid per action b_(a).In one embodiment, the advertisement may be displayed whenb_(m)+b_(c)×CTR+b_(a)×AR≧p. The bidding scheme may be modified to yieldan expected price per impression of p. For example, an advertiser 120may modify its bids per impression, click and actions to make theexpected payment equal to a certain value of p. In an alternativeembodiment, the advertiser 120 may submit different bids for differenttypes of actions. For example, one action may be a customer creating alog-in for a site, which may have a smaller bid than an action of makinga product sale.

The ad publisher 116 may select the advertisement with the highest ormost relevant bid to be displayed. The ad publisher server 112 mayinclude the advertisement with a page displayed by the web server 106 tothe user device 102. A consumer or user may view the page with thedisplayed advertisement on the user device 102. In step 206, the userdevice 102 accesses the site with the advertisement to be displayed onthe user device 102. The ad publisher 116 through the ad publisherserver 112 and/or the web server 106 provides the page with theadvertisement for viewing on the user device 102 as in step 208. Thisresults in an ad impression for the advertisement displayed on the page.In step 210, a payment from the advertiser 116 may be calculated and/orcollected by the ad publisher 116 if the advertiser's bid was based onpayment per impression. The payment may be based on the number ofimpressions recorded multiplied by the bid per impression.Alternatively, the payment from the advertiser 120 may be calculatedand/or collected at a set time interval, such as by monthly bills fromthe ad publisher 116. For example, at the end of the month, the adpublisher 116 will send a bill to the advertiser 120 for that month'simpressions.

The user may click on the advertisement in step 212, resulting in aclick-through. In step 214, a payment from the advertiser 116 may becalculated and/or collected by the ad publisher 116. The payment may bebased on the recorded click-through rate multiplied by the bid perclick. This is a payment for a PPC model. A PPA model may still providepayments for click-throughs, but the bid may reflect different amountsfor impressions, clicks and/or actions. In the PPA model, payments foreach of impressions, clicks and/or actions may be combined into onepayment or may be paid together as a single payment. Alternatively, thead publisher 116 may calculate and/or bill the advertiser 120periodically, such as monthly, rather than collecting payments for eachimpression, click and/or action.

The result of the click in step 212 may be displaying the advertiser'sweb page on the user device 102. In step 215, the advertiser 120 servesits web page or a page related to its advertisement to the user device102. In particular, the advertiser server 118 and/or the web server 106may provide the advertiser's 120 page to the user device 102. As aresult of the click-through, the user may leave the domain of thepublisher and enter the advertiser's web site. It is on the advertiser's120 page that the user may perform an action as described above. Forexample, in his/her interaction with this web site, the user mightperform certain actions such as filling out a form, signing up at theweb site, calling a phone number listed on the web site, or purchasingmerchandise listed on the web site as in step 216. The action may takeplace outside the scope of control of the ad publisher 116. Inparticular, the ad publisher 116 may rely on the advertiser to reportthe actions that take place (perhaps through an automatic software agentsupplied by the ad publisher 116) as in step 217. The action may occuron the web page served by the advertiser 120 in step 215, so theadvertiser 120 detects and reports that action to the ad publisher 116in step 217. Conversely, impressions and click-throughs may be recordedby the ad publisher 116.

The detection of the action in step 216 may vary based on the type ofaction. An action such as buying a product or service may take placedays or even weeks after the initial impression for the advertisement.Accordingly, the linking of an action with a particular advertisementimpression may be affected by the timing difference of when theadvertisement was shown (impression) and when the user performed theaction. In one embodiment, post-purchase surveys, or the use of cookietechnology may be used to identify the source or cause of the action.Alternatively, tracking software may be used to identify when animpression eventually leads to an action. The tracking software mayidentify the original impression that introduced the user to theadvertiser 120. For example, a user may see an advertisement from theadvertiser 120 and click on that advertisement, which displays thewebsite of the advertiser 120 to the user. This first visit may berecorded in cache or through tracking software. If the user laterpurchases a product or performs another action on the advertiser's 120website then, the stored information identifies the initial impressionthat led to the action.

The performing of an action by the user in step 216 may be used tocalculate the payment for the action in step 218. In one embodiment, anadvertiser 120 may specify a bid b_(m) for impressions and a bid b_(a)for actions. The ad publisher 116 may award the advertisement slot tothe advertiser 120 when b_(m)+AR×b_(a)≧p, where AR is the currentestimate of the action rate. As discussed above, the first time theadvertiser 120 places a bid, there is an initial premium fee, which ispaid that establishes an initial estimated AR for the advertiser 120.Subsequently, the AR is determined based on the reported actions fromthe advertiser 120 as discussed below in step 220.

In one embodiment, the advertiser 120 may be charged p_(m) for eachimpression and p_(a) for each action, where

p _(m)=min(b _(m) , p) and p _(a)=(p−p _(m))/AR.

The payment for each impression is the minimum value of the bid for theimpression b_(m), or the reserve price per impression p. The payment perimpression is the bid for the impression b_(m), unless the bid for theimpression b_(m) is less than the reserve price per impression p, inwhich case the payment is the reserve price p. If the advertiser's bidper impression is enough to win the auction for an ad slot, then theadvertiser may not be charged an additional amount for actions. In otherwords, p_(a)=0 when b_(m)=p, because p_(m)=b_(m)=p. As discussed above,the value p is a minimum amount the advertiser needs to bid to win theslot. This may be the reserve price in the auction, or a next highestbid. For example, in an auction with no reserve price, p may be themaximum bid of competing bidders, such that if an advertiser wants towin the slot, he/she needs to bid at least an amount p. The action ratemay be estimated as one divided by the number of impressions since thelast impression that lead to an action.

FIG. 3 illustrates one embodiment of a pay-per-action process. FIG. 3may be an illustration of the calculation of the payment for an actionas in step 218. In block 302, a first impression is recorded by the adpublisher 116 that results in an action. In particular, a user of theuser device 102 views the page with the advertisement from theadvertiser 120 and that impression results in an action recorded by theadvertiser 120. Subsequently, a number of impressions are recorded inblock 304 that do not result in an action. The ad publisher 116 recordseach impression for the advertisement. In block 306, a second impressionis recorded (after the number of impressions recorded in block 304) thatresults in an action. As discussed above, the advertiser 120 reports theaction from the first and second impressions to the ad publisher 116 whodetermines which impression led to the action.

The second impression may be defined as the k+1 impression, where k−1 isthe number of impressions that took place between the first impressionand the second impression. In other words, the first and secondimpressions both resulted in an action, but none of the k−1 impressionsbetween them resulted in an action. In block 308, the value of k−1 isdetermined by subtracting the first impression from the secondimpression to get the value k. At the time of the second impression thatled to an action, the action rate AR is estimated to be AR=1/k as inblock 310. In other words, an action may occur approximately once everyk impressions. The action rate may then be updated with each reportedaction based on the number of impressions between impressions resultingin actions. In one embodiment, the action rate may be one divided by theaverage number of impression k_(AVE) between impressions resulting inactions. Alternatively, the total number of impressions resulting inactions may be divided into the total number of impressions betweenthose impressions.

The payment from the advertiser 120 for each action may be determined asin block 312. In particular, the payment for the action that resultedfrom the second impression in block 306 may be (p−p_(m))k. This paymentamount may be reassigned to the impressions between the first and secondimpressions (including the second impression) by assigning an amountequal to p−p_(m) to each of those impressions. In addition, eachimpression may be charged an amount equal to p_(m), which was thepayment for each impression. Accordingly, with this reassignment ofcharges, the cost corresponding to each impression will be p. In otherwords, on average an advertiser may be charged p per impression,regardless of how the advertisers report the actions (e.g., whether theyreport the actions truthfully, or they try to deceive the system).

Referring back to FIG. 2, the action rate may be updated each time anaction is reported by the advertiser 120 as in step 220. In addition,the previous payments for actions may be recalculated as actions arereported. In the example of FIG. 3, assume that one of the k−1impressions between the first and second impression was subsequentlyfound to result in an action. The payment for the action for the secondimpression may then be recalculated to be based on the differencebetween the second impression and that impression that resulted in anaction, rather than the difference between the first and secondimpressions. As a result, the action rate increases and the paymentdecreases because the k value in (p−p_(m))k has decreased.

The advertiser 120 may wish to edit its bid amount ba based on therevised action rate. In particular, as the action rate is increased, thebid amount used by the ad provider 116 may also increase because theadvertisement slot may be allocated when b_(m)+AR×b_(a)≧p. Accordingly,as the advertiser 120 reports actions and has an increased action rate,it may decrease its bid amount b_(a). Alternatively, if the advertiser120 has a low action rate AR, then it may be necessary to increase thebid amount b_(a) in order to be awarded an advertisement slot. Thissystem rewards the advertisers with higher action rates by being morelikely to be awarded advertisement slots and by paying less per actiondepending on the action rate (or the number of impressions betweenactions).

Referring to FIG. 4, an illustrative embodiment of a general computersystem is shown and is designated 400. The web server 106, the web logdatabase 104, the ad publisher server 112, the advertiser server 118,the ad publisher database 114, the user device 106, the web serveroperator 110, the ad publisher 116, and/or the advertiser 120 may be thecomputer system 400, or be any of the components described in thecomputer system 400. The computer system 400 can include a set ofinstructions that can be executed to cause the computer system 400 toperform any one or more of the methods or computer based functionsdisclosed herein. The computer system 400 may operate as a standalonedevice or may be connected, e.g., using a network, to other computersystems or peripheral devices.

In a networked deployment, the computer system may operate in thecapacity of a server or as a client user computer in a server-clientuser network environment, or as a peer computer system in a peer-to-peer(or distributed) network environment. The computer system 400 can alsobe implemented as or incorporated into various devices, such as apersonal computer (PC), a tablet PC, a set-top box (STB), a personaldigital assistant (PDA), a mobile device, a palmtop computer, a laptopcomputer, a desktop computer, a communications device, a wirelesstelephone, a land-line telephone, a control system, a camera, a scanner,a facsimile machine, a printer, a pager, a personal trusted device, aweb appliance, a network router, switch or bridge, or any other machinecapable of executing a set of instructions (sequential or otherwise)that specify actions to be taken by that machine. In a particularembodiment, the computer system 400 can be implemented using electronicdevices that provide voice, video or data communication. Further, whilea single computer system 400 is illustrated, the term “system” shallalso be taken to include any collection of systems or sub-systems thatindividually or jointly execute a set, or multiple sets, of instructionsto perform one or more computer functions.

As illustrated in FIG. 4, the computer system 400 may include aprocessor 402, e.g., a central processing unit (CPU), a graphicsprocessing unit (GPU), or both. The processor 402 may be a component ina variety of systems. For example, the processor 402 may be part of astandard personal computer or a workstation. The processor 402 may beone or more general processors, digital signal processors, applicationspecific integrated circuits, field programmable gate arrays, servers,networks, digital circuits, analog circuits, combinations thereof, orother now known or later developed devices for analyzing and processingdata. The processor 402 may implement a software program, such as codegenerated manually (i.e., programmed).

The computer system 400 may include a memory 404 that can communicatevia a bus 408. The memory 404 may be a main memory, a static memory, ora dynamic memory. The memory 404 may include, but is not limited tocomputer readable storage media such as various types of volatile andnon-volatile storage media, including but not limited to random accessmemory, read-only memory, programmable read-only memory, electricallyprogrammable read-only memory, electrically erasable read-only memory,flash memory, magnetic tape or disk, optical media and the like. In oneembodiment, the memory 404 includes a cache or random access memory forthe processor 402. In alternative embodiments, the memory 404 isseparate from the processor 402, such as a cache memory of a processor,the system memory, or other memory. The memory 404 may be an externalstorage device or database for storing data. Examples include a harddrive, compact disc (“CD”), digital video disc (“DVD”), memory card,memory stick, floppy disc, universal serial bus (“USB”) memory device,or any other device operative to store data. The memory 404 is operableto store instructions executable by the processor 402. The functions,acts or tasks illustrated in the figures or described herein may beperformed by the programmed processor 402 executing the instructionsstored in the memory 404. The functions, acts or tasks are independentof the particular type of instructions set, storage media, processor orprocessing strategy and may be performed by software, hardware,integrated circuits, firm-ware, micro-code and the like, operating aloneor in combination. Likewise, processing strategies may includemultiprocessing, multitasking, parallel processing and the like.

As shown, the computer system 400 may further include a display unit414, such as a liquid crystal display (LCD), an organic light emittingdiode (OLED), a flat panel display, a solid state display, a cathode raytube (CRT), a projector, a printer or other now known or later developeddisplay device for outputting determined information. The display 414may act as an interface for the user to see the functioning of theprocessor 402, or specifically as an interface with the software storedin the memory 404 or in the drive unit 406.

Additionally, the computer system 400 may include an input device 416configured to allow a user to interact with any of the components ofsystem 400. The input device 416 may be a number pad, a keyboard, or acursor control device, such as a mouse, or a joystick, touch screendisplay, remote control or any other device operative to interact withthe system 400.

In a particular embodiment, as depicted in FIG. 4, the computer system400 may also include a disk or optical drive unit 406. The disk driveunit 406 may include a computer-readable medium 410 in which one or moresets of instructions 412, e.g. software, can be embedded. Further, theinstructions 412 may embody one or more of the methods or logic asdescribed herein. In a particular embodiment, the instructions 412 mayreside completely, or at least partially, within the memory 404 and/orwithin the processor 402 during execution by the computer system 400.The memory 404 and the processor 402 also may include computer-readablemedia as discussed above.

The present disclosure contemplates a computer-readable medium thatincludes instructions 412 or receives and executes instructions 412responsive to a propagated signal, so that a device connected to anetwork 420 can communicate voice, video, audio, images or any otherdata over the network 420. Further, the instructions 412 may betransmitted or received over the network 420 via a communication port418. The communication port 418 may be a part of the processor 402 ormay be a separate component. The communication port 418 may be createdin software or may be a physical connection in hardware. Thecommunication port 418 is configured to connect with a network 420,external media, the display 414, or any other components in system 400,or combinations thereof. The connection with the network 420 may be aphysical connection, such as a wired Ethernet connection or may beestablished wirelessly as discussed below. Likewise, the additionalconnections with other components of the system 400 may be physicalconnections or may be established wirelessly.

The network 420 may include wired networks, wireless networks, orcombinations thereof. The wireless network may be a cellular telephonenetwork, an 802.11, 802.16, 802.20, or WiMax network. Further, thenetwork 420 may be a public network, such as the Internet, a privatenetwork, such as an intranet, or combinations thereof, and may utilize avariety of networking protocols now available or later developedincluding, but not limited to TCP/IP based networking protocols.

While the computer-readable medium is shown to be a single medium, theterm “computer-readable medium” includes a single medium or multiplemedia, such as a centralized or distributed database, and/or associatedcaches and servers that store one or more sets of instructions. The term“computer-readable medium” shall also include any medium that is capableof storing, encoding or carrying a set of instructions for execution bya processor or that cause a computer system to perform any one or moreof the methods or operations disclosed herein.

In a particular non-limiting, exemplary embodiment, thecomputer-readable medium can include a solid-state memory such as amemory card or other package that houses one or more non-volatileread-only memories. Further, the computer-readable medium can be arandom access memory or other volatile re-writable memory. Additionally,the computer-readable medium can include a magneto-optical or opticalmedium, such as a disk or tapes or other storage device to capturecarrier wave signals such as a signal communicated over a transmissionmedium. A digital file attachment to an e-mail or other self-containedinformation archive or set of archives may be considered a distributionmedium that is a tangible storage medium. Accordingly, the disclosure isconsidered to include any one or more of a computer-readable medium or adistribution medium and other equivalents and successor media, in whichdata or instructions may be stored.

In an alternative embodiment, dedicated hardware implementations, suchas application specific integrated circuits, programmable logic arraysand other hardware devices, can be constructed to implement one or moreof the methods described herein. Applications that may include theapparatus and systems of various embodiments can broadly include avariety of electronic and computer systems. One or more embodimentsdescribed herein may implement functions using two or more specificinterconnected hardware modules or devices with related control and datasignals that can be communicated between and through the modules, or asportions of an application-specific integrated circuit. Accordingly, thepresent system encompasses software, firmware, and hardwareimplementations.

In accordance with various embodiments of the present disclosure, themethods described herein may be implemented by software programsexecutable by a computer system. Further, in an exemplary, non-limitedembodiment, implementations can include distributed processing,component/object distributed processing, and parallel processing.Alternatively, virtual computer system processing can be constructed toimplement one or more of the methods or functionality as describedherein.

Although the present specification describes components and functionsthat may be implemented in particular embodiments with reference toparticular standards and protocols, the invention is not limited to suchstandards and protocols. For example, standards for Internet and otherpacket switched network transmission (e.g., TCP/IP, UDP/IP, HTML, HTTP)represent examples of the state of the art. Such standards areperiodically superseded by faster or more efficient equivalents havingessentially the same functions. Accordingly, replacement standards andprotocols having the same or similar functions as those disclosed hereinare considered equivalents thereof.

The illustrations of the embodiments described herein are intended toprovide a general understanding of the structure of the variousembodiments. The illustrations are not intended to serve as a completedescription of all of the elements and features of apparatus and systemsthat utilize the structures or methods described herein. Many otherembodiments may be apparent to those of skill in the art upon reviewingthe disclosure. Other embodiments may be utilized and derived from thedisclosure, such that structural and logical substitutions and changesmay be made without departing from the scope of the disclosure.Additionally, the illustrations are merely representational and may notbe drawn to scale. Certain proportions within the illustrations may beexaggerated, while other proportions may be minimized. Accordingly, thedisclosure and the figures are to be regarded as illustrative ratherthan restrictive.

One or more embodiments of the disclosure may be referred to herein,individually and/or collectively, by the term “invention” merely forconvenience and without intending to voluntarily limit the scope of thisapplication to any particular invention or inventive concept. Moreover,although specific embodiments have been illustrated and describedherein, it should be appreciated that any subsequent arrangementdesigned to achieve the same or similar purpose may be substituted forthe specific embodiments shown. This disclosure is intended to cover anyand all subsequent adaptations or variations of various embodiments.Combinations of the above embodiments, and other embodiments notspecifically described herein, will be apparent to those of skill in theart upon reviewing the description.

The Abstract of the Disclosure is provided to comply with 37 C.F.R.§1.72(b) and is submitted with the understanding that it will not beused to interpret or limit the scope or meaning of the claims. Inaddition, in the foregoing Detailed Description, various features may begrouped together or described in a single embodiment for the purpose ofstreamlining the disclosure. This disclosure is not to be interpreted asreflecting an intention that the claimed embodiments require morefeatures than are expressly recited in each claim. Rather, as thefollowing claims reflect, inventive subject matter may be directed toless than all of the features of any of the disclosed embodiments. Thus,the following claims are incorporated into the Detailed Description,with each claim standing on its own as defining separately claimedsubject matter.

The above disclosed subject matter is to be considered illustrative, andnot restrictive, and the appended claims are intended to cover all suchmodifications, enhancements, and other embodiments, which fall withinthe true spirit and scope of the present invention. Thus, to the maximumextent allowed by law, the scope of the present invention is to bedetermined by the broadest permissible interpretation of the followingclaims and their equivalents, and shall not be restricted or limited bythe foregoing detailed description. While various embodiments of theinvention have been described, it will be apparent to those of ordinaryskill in the art that many more embodiments and implementations arepossible within the scope of the invention. Accordingly, the inventionis not to be restricted except in light of the attached claims and theirequivalents.

1. A method for providing an advertisement based on a bid, the methodcomprising: charging an advertiser a premium for bidding for displayingan advertisement; receiving a bid for displaying the advertisement fromthe advertiser upon the charging of the premium; receiving an indicationfrom the advertiser regarding an occurrence of at least one action,wherein the at least one action is measured by the advertiser and occursafter a click-through on an advertisement from the advertiser;calculating an action rate corresponding to the number of at least oneactions per impressions of the advertisement, wherein the impressionsare displays of the advertisement; and displaying the advertisementwhile the action rate exceeds a minimum action rate; wherein the bid isbased at least partially on the calculated action rate.
 2. The methodaccording to claim 1 wherein the premium is an initial fee paid by theadvertiser by its first bid.
 3. The method according to claim 2 whereinthe premium is based at least partially on a number of impressionsrecorded between impressions that led to actions, wherein the premium isbased at least partially on the minimum action rate.
 4. The methodaccording to claim 3 wherein the premium comprises kp(1/δ−1), where k isthe number of impressions between actions, δ is the minimum action rate,and p is the reserve bid price.
 5. The method according to claim 1wherein the bid comprises an amount per action multiplied by thecalculated action rate.
 6. The method according to claim 5 wherein theadvertisement from the advertiser is displayed while the bid is greaterthan a reserve bid price and a bid from a second advertiser.
 7. Themethod according to claim 1 wherein the action rate is based on a numberof impressions between actions.
 8. The method according to claim 7wherein the action rate is updated upon each of the indications from theadvertiser of an action.
 9. The method according to claim 1 wherein theimpressions is a display of the advertisement.
 10. A method forreceiving a payment for displaying an advertisement comprising:receiving a request from an advertiser for an advertisement to bedisplayed, wherein the request includes a bid amount and theadvertisement is displayed when the bid amount exceeds a threshold bid;calculating an action rate of actions per impressions, wherein theactions are taken after a click-through of the advertisement and theimpressions are a number of times the advertisement is displayed; anddetermining a payment to be paid by the advertiser based on the actionrate, wherein the payment comprises the difference between the bidamount and the threshold bid divided by the action rate.
 11. The methodof claim 10 wherein the bid amount comprises a price per impression. 12.The method of claim 10 wherein the threshold bid is the smaller of a bidper impression and a minimum price, wherein the minimum price is one ofa reserve price or a second highest bid amount.
 13. The method of claim10 wherein the action comprises a click on the advertisement displayinga page and a subsequent interaction with the displayed page.
 14. Themethod of claim 10 further comprising: receiving an indication of afirst action; receiving an indication of a second action; determining anumber of impressions between the first and second actions; andcalculating the action rate as the inverse of the number of impressionsbetween the first and second actions.
 15. The method of claim 14 whereinthe action rate is updated upon receiving each indication of asubsequent action, wherein each of the subsequent actions are divided bythe number of impressions between those actions.
 16. In a computerreadable storage medium having stored therein data representinginstructions executable by a programmed processor for displaying anadvertisement, the storage medium comprising instructions operative for:receiving a first bid for display of a first advertiser's advertisement,wherein the first bid is based on at least one action resulting from animpression of the first advertiser's advertisement; receiving a secondbid for display of a second advertiser's advertisement, wherein thesecond bid is based on at least one action resulting from an impressionof the second advertiser's advertisement; comparing the first bid andthe second bid; displaying the first advertiser's advertisement when thefirst bid exceeds the second bid and displaying the second advertiser'sadvertisement when the second bid exceeds the first bid; and determiningan action rate based on a number of the at least one action resultingfrom an impression of the advertisement for the displayed advertiserdivided by a total number of impressions occurring between each of theat least one action; wherein payment for an advertisement displayed isbased on the action rate, and the action rate is updated for eachrecorded action from the advertiser of the displayed advertisement. 17.The storage medium according to claim 16 further comprising: receivingan indication from the first advertiser regarding the at least oneaction resulting from an impression of the first advertiser'sadvertisement; and receiving an indication from the second advertiserregarding the at least one action resulting from an impression of thesecond advertiser's advertisement.
 18. The storage medium according toclaim 17 wherein the updating of the action rate comprises receivingadditional indications of actions.
 19. The storage medium according toclaim 18 wherein the payment may be adjusted based on the updated actionrate.
 20. The storage medium according to claim 16 wherein theadvertisement is displayed while the action rate exceeds a minimumaction rate.
 21. The storage medium according to claim 16 furthercomprising: receiving an initial premium fee from the first advertiserbefore the first advertiser submits its initial bid; and receiving aninitial premium fee from the second advertiser before the secondadvertiser submits its initial bid.
 22. A method for establishing apayment for displaying an advertisement comprising: recording eachimpression of a displayed advertisement from an advertiser; receiving anindication of actions and corresponding impressions that resulted ineach of the actions; determining a number of impressions betweensuccessive actions; calculating an action rate based on an averagenumber of impressions between successive actions; revising the actionrate upon receiving an indication of an additional action; and receivinga payment for the displayed advertisement, wherein the payment is basedon the revised action rate.
 23. The method according to claim 22 furthercomprising: displaying the advertisement when the action rate is above aminimum rate.
 24. The method according to claim 22 wherein each of theactions are an interaction with the advertiser.